Question: Information from the Form 990 for the
Information from the Form 990 for the American Heart Association for the fiscal year ending June 30, 2007, follows. The full text of the Form 990 is available at www.americanheart.org or www.guidestar.org.
Required
a. Compute the following performance measures using the Form 990 data presented in this exercise and comment on what information they convey to a potential donor without comparing them to prior years or other comparable agencies.
1. Current ratio—liquidity.
2. Revenues/expenses—going concern.
3. Program expenses/total expenses—program effectiveness.
4. Public support/fund-raising expenses—fund-raising efficiency.
5. Investment performance.
b. Obtain the audited annual financial statement for the American Heart Association for fiscal year 2007 from www.americanheart.org. Calculate the same ratios listed in requirement
a. Comment on any differences. (Note: Use the most recent year for which both audited financial statements and Form 990 are readily available.)
c. Discuss the advantages of analyzing financial performance using audited annual financial statement information versus IRS Form 990 information.
QUESTION CONTINUE TO NEXT PAGE
Transcribed Image Text:
OMB No. 1545-0047 990 Return of Organization Exempt From Income Tax 2006 Form Under section 501(c), 527, or 4947(a)(1) of the Internal Revenue Code (except black lung benefit trust or private foundation) Department of the Treasury Internal Revenue Service Open to Public Inspection > The organization may have to use a copy of this return to satisfy state reporting requirements. A For the 2006 calendar year, or tax year beginning 7/1/2006 , 2006, and ending 6/30/2007 , 20 D Employer identification number B Check if applicable: O Address change OName change Please C Name of organization use IRS Jabel or AMERICAN HEART ASSOCIATION INC. Number and street (or P.O. box if mail is not delivered to street address) Room/suite E Telephone number print or type. See O Initial return Specific Instruc- tions. City or town, state or country, and ZIP + 4 F Accounting method: O Other (specify) > H and I are not applicable to section 527 organizations. H(a) Is this a group return for affiliates? O Yes t No H(b) If "Yes," enter number of affiliates ..--.---------- O Final retum O Cash F Accrual O Amended return O Application pending • Section 501(c)(3) organizations and 4947(a)(1) nonexempt charitable trusts must attach a completed Schedule A (Form 990 or 990-EZ). G Website: www.americanheart.org H(c) Are all affiliates included? (If "No," attach a list. See instructions.) H(d) Is this a separate retum filed by an organization covered by a group ruling? I Group Exemption Number M Check F if the organization is not required O Yes O No J Organization type (check only one) > F 501(c) ( 3 )- (insert no.) O 4947(a)(1) or O 527 K Check here O if the organization is not a 509(a)(3) supporting organization and its gross receipts are normally not more than $25,000. A return is not required, but if the organization chooses to file a return, be sure to file a complete return. O Yes No L Gross receipts: Add lines 6b, 8b, 9b, and 10b to line 12 Part I Revenue, Expenses, and Changes in Net Assets or Fund Balances (See the instructions.) 942515075 to attach Sch. B (Form 990, 990-EZ, or 990-PF). Contributions, gifts, grants, and similar amounts received: a Contributions to donor advised funds b Direct public support (not included on line 1a) c Indirect public support (not included on line 1a) 1a a ... 1b 467,576,977 1c 14,042,370 1d 17,500 d Government contributions (grants) (not included on line 1a) e Total (add lines 1a through 1d) (cash $_ 481,636,847 noncash $ 481,636,847 20,448,094 2,072,301 1e ). Program service revenue including government fees and contracts (from Part VII, line 93) 2 Membership dues and assessments. 3 Interest on savings and temporary cash investments 4 5,615,808 5 Dividends and interest from securities 5 13,335,273 1,377,133 6a Gross rents... b Less: rental expenses. . c Net rental income or (loss). Subtract line 6b from line 6a . 7 Other investment income (describe 6a 6b 232,907 6c 1,144,226 7 5,556,617 (A) Securities (B) Other 8a Gross amount from sales of assets other than inventory .. b Less: cost or other basis and sales expenses. c Gain or (loss) (attach schedule) d Net gain or (loss). Combine line 8c, columns (A) and (B).. Special events and activities (attach schedule). If any amount is from gaming, check here > E 241,555,344 8a 220,379,572 8b 21,175,772 8c 3,937,315 1,724,031 2,213,284 8d 23,389,056 9 218,096,944 of a Gross revenue (not including $ contributions reported on line 1b). b Less: direct expenses other than fundraising expenses c Net income or (loss) from special events. Subtract line 9b from line 9a 87,020,598 35,727,326 9a 9b 9c 51,293,272 10a 66,697,435 16,480,005 10a Gross sales of inventory, less returns and allowance b Less: cost of goods sold.. c Gross profit or (loss) from sales of inventory (attach schedule). Subtract line 10b from line 10a 11 Other revenue (from Part VII, line 103) 10b 50,217,430 13,262,310 10c 11 12 Total revenue. Àdd lines 1e, 2, 3, 4, 5, 6c, 7, 8d, 9c, 10c, and 11 667,971,234 468,608,169 12 13 13 Program services (from line 44, column (B) 14 Management and general (from line 44, column (C)) 15 Fundraising (from line 44, column (D)) 16 Payments to affiliates (attach schedule) 17 Total expenses. Add lines 16 and 44, column (A). 14 49,149,148 15 88,013,012 16 17 605,770,329 62,200,905 711,700,066 18 Excess or (deficit) for the year. Subtract line 17 from line 12 18 19 19 Net assets or fund balances at beginning of year (from line 73, column (A)). 20 Other changes in net assets or fund balances (attach explanation) 21 Net assets or fund balances at end of year. Combine lines 18, 19, and 20 41,079,837 814,980,808 20 21 For Privacy Act and Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11282Y Form 990 (2006) D00000 enueney AMERICAN HEART ASSOCIATION, INC. Form 990 (2006) Page 2 Part II Statement of All organizations must complete column (A). Columns (B), (C), and (D) are required for section 501(c)(3) and (4) Functional Expenses organizations and section 4947(a)(1) nonexempt charitable trusts but optional for others. (See the instructions.) Do not include amounts reported on line (B) Program services (C) Management and general (A) Total (D) Fundraising 6b, 8b, 9b, 10b, or 16 of Part I. 22a Grants paid from donor advised funds (attach schedule) (cash $. If this amount includes foreign grants, check here O 22a O noncash $ 0) 22b Other grants and allocations (attach schedule) (cash $ 141,145,161 noncash $ If this amount includes foreign grants, check here E 22b 141,145,161 141,145,161 23 Specific assistance to individuals (attach schedule). . . 24 Benefits paid to or for members (attach schedule) 23 24 25a Compensation of current officers, directors, key employees, etc. listed in Part V-A (attach schedule) . . 25a 2,897,646 2,897,646 b Compensation of former officers, directors, key employees, etc. listed in Part V-B (attach schedule) .. c Compensation and other distributions, not included above, to disqualified persons (as defined under section 4958((1) and persons described in section 4958(c\/3/B) (attach schedule) 25b 25c 26 Salaries and wages of employees not included on lines 25a, b, and c . 26 184,109,649 125,222,346 23,274,201 35,613,102 27 Pension plan contributions not included on lines 25a, b, and c c. .. 27 13,583,445 8,562,340 2,504,725 2,516,380 28 Employee benefits not included on lines 25а - 27 17,841.835 14,599,431 28 11,445,736 3,032,319 3,363,780 29 9,382,526 2,455,416 2,761,489 29 Payroll taxes Professional fundraising fees Accounting fees 32 Legal fees 33 Supplies 34 Telephone 35 Postage and shipping 36 Occupancy Equipment rental and maintenance Printing and publications 30 30 3,571,002 3,571,002 31 1,072,020 939,223 6,181,265 1,072,020 939,223 31 32 33 4,018,847 470,214 1,692,204 34 6,275,223 4,155,021 665,790 1,454,412 17,586,480 15,426,141 6,970,211 40,490,974 11,699,158 10,223,574 4,369,853 29,869,365 35 381,156 5,506,166 2,023,560 977.119 36 3,179,007 1,623,239 37 37 263,078 1,613,256 38 38 10,358,531 39 Travel .. 39 22,951,235 15,850,867 5,487,112 40 Conferences, conventions, and meetings. 40 20,389,445 17,930,618 939,517 1,519,310 41 Interest 41 42 42 10,911,154 7,409,353 1,582,528 1,919,273 Depreciation, depletion, etc. (attach schedule) Other expenses not covered above (itemize): 43 a 43a 78,828,789 67,323,404 4,057,380 7,448,005 b 43b 43c d 43d 43e e f 43f g 43g 44 Total functional expenses. Add lines 22a through 43g. (Organizations completing columns (B)-(D), carry these totals to lines 13-15) . 44 605,770,329 468,608,169 49,149,148 88,013,012 Joint Costs. Check E if you are following SOP 98-2. Are any joint costs from a combined educational campaign and fundraising solicitation reported in (B) Program services? . E Yes O No If "Yes," enter (i) the aggregate amount of these joint costs $_ 134,379,447; (ii) the amount allocated to Program services $ 87,454,101; (iii) the amount allocated to Management and general $ 5,504,024 ; and (iv) the amount allocated to Fundraising $ 41,421,322
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